By Brian Sozzi

After chopping prices and overhauling its merchandise department, retailer Target (TGT) did its part for the second straight quarter to signal that its worst days in 2024 and 2025 are in the rearview mirror.

The retailer delivered another big earnings beat versus estimates. Sales increased in all merchandise departments, led by beauty and food. Store traffic increased.

The company even jacked up its full-year sales and profit outlooks.

"We're encouraged," Target CEO Michael Fiddelke told Yahoo Finance in an interview. "We laid out a plan for the year that had a lot of change in it — more change to what we were selling and how we were going to sell it than in the last decade. And a couple of quarters in, it's great to see a strong guest response to some of the places we're making changes."

"There's a lot of work still in front of us," Fiddelke added, "and the goal isn't a couple strong quarters. The goal is years of sustained top-line growth. And so we'll turn the page on this one and get back to work."

School supplies are displayed at a Target store on Aug. 13, 2026, in downtown Brooklyn in New York City. (Michael M. Santiago/Getty Images)

Since the start of 2026, Target has moved quickly to rewrite its merchandising wrongs to improve traffic to its stores and online.

It has expanded wellness offerings, added 3,000 beauty products across 60 new brands, reset 75% of home decorative accessories, accelerated food and beverage innovation, and introduced a back-to-school assortment that is more than 50% new, Jefferies analyst Corey Tarlowe pointed out in a recent note.

Tarlowe said this represents one of the broadest assortment refreshes in years and is beginning to translate into improved traffic trends. The longtime Target bull thinks the market may be underestimating the durability of the traffic benefits from the big box retailer's "merchandising reset."

The company has also cut prices on 10,000 items — mostly food products — in the past year to be more competitive with the likes of Walmart (WMT) and Kroger (KR).

Fiddelke said more price cuts are on the way.

"We're not done, so you can expect us to continue to lean into smart price investment. Some of the value I was describing that's on our shelves for back to school, I think epitomizes that," Fiddelke said, adding that he is "encouraged" by how the back-to-school shopping season has started.